Pubdate: Thu, 01 Nov 2018
Source: Philadelphia Inquirer, The (PA)
Copyright: 2018 Philadelphia Newspapers Inc
Author: Paul Elias

SAN FRANCISCO (AP) -- A Colorado jury likely threw cold water on
future legal challenges against cannabis companies by homeowners who
consider filing racketeering lawsuits alleging proximity to pot
operations hurts their property values, analysts and industry lawyers
said Thursday.

A federal jury in Denver on Wednesday rejected claims involving the
odor from a pot farm made in a case that was closely watched by the
marijuana industry.

It was the first such lawsuit to reach a jury. Three others are
pending in California, Massachusetts and Oregon.

"The big takeaway is that the verdict is likely to curb the enthusiasm
for bringing these lawsuits in the future," Vanderbilt University law
professor Rob Mikos said.

He said it's easy to show marijuana companies are violating federal
laws against pot, but the Colorado verdict shows the difficulty In
proving actual harm.

"There was a thought that this would be easy money," Mikos said about
such claims.

Congress created the Racketeer Influenced and Corrupt Organizations
Act -- better known as RICO -- to target the Mafia in the 1970s. It
allowed prosecutors to argue that leaders of a criminal enterprise
should pay a price along with lower-level defendants.

The law also allows private parties to file lawsuits claiming their
business or property has been damaged by a criminal enterprise. Those
who can prove it can be financially compensated for damages plus
attorneys' expenses.

Scott Schlager, a lawyer who filed a similar lawsuit against a
Cambridge, Massachusetts, dispensary agreed with Mikos, saying
racketeering lawsuits are expensive to litigate.

"They shouldn't be the next cottage industry," he said. "There is a
lot of uncertainty."

Schlager said the Denver verdict will have no effect on his case
because the two legal actions have important differences.

The Colorado plaintiffs complained that a farm's odor lowered their
property value by about $30,000.

Schlager's clients in Harvard Square argue that the stigma of a
marijuana dispensary in the upscale business district lowered property
values by $29 million.

California attorney Ken Stratton, who represents a pot farmer being
sued by eight homeowners near Petaluma, California, in the heart of
wine country, said he was surprised the Denver case reached a jury.

"I think we'll see more and more of these knocked out before they go
to trial," Stratton said. "The racketeering law wasn't meant to
litigate land disputes."

He also predicted the Denver verdict will make other lawyers and
disgruntled neighbors look elsewhere to settle their disputes with
marijuana operations.

He said showing that cannabis operations impact land prices is
difficult, especially if the homeowners are speculating rather than
arguing they lost money in actual sales.

Emma Quinn-Judge, a Boston lawyer defending the Cambridge dispensary,
agreed that showing harm is the biggest hurdle.

"If you know anything about Cambridge home prices then you know that
arguing their value has dropped $29 million is laughable," she said.